In Versteegh v HMRC (TC03526 – 28 April 2014) the tribunal had to decide the correct allocation of costs in circumstances where only some of the appellant companies (all members of the same group) had lost their appeal.
The appeals were lead cases in relation to a scheme entered into by a number of corporate groups. The scheme was designed to achieve a corporation tax deduction in one group company (‘the borrower’) for the costs of an intra-group borrowing but without any concomitant taxable accrual or receipt in the group company making the loan (‘the lender’) or in the group company which received an amount of preference shares issued by the borrower equivalent to interest on the loan (‘the share recipient’).
The scheme would therefore achieve its tax objective only if the borrower was entitled to a tax deduction and neither the lender nor the share...
